Abstract:
World food markets are becoming increasingly interconnected as firms seek to sell
their products not only in domestic markets but in international ones as well. Moreover,
processed and high-value consumer-oriented products represent an increasing share of
total agricultural exports. This growing international market may have implications for the
future competitiveness of agricultural cooperatives in world food trade.
The objective of this research is to investigate the arrangements that agricultural
cooperatives implement in world food markets and to determine whether cooperatives are
successfully competing in these increasingly global venues. Because cooperatives are
utility maximizers, a theoretical portfolio model is employed to identify the trade-offs
between the risk and expected net returns associated with international arrangements. The
empirical model is a reduced form of the portfolio model, in which socio-economic factors
are included in a seemingly unrelated regression system.
It was discovered that most agricultural cooperatives seek to penetrate market
niches by selling processed and specialty products rather than by pursuing high-risk
overseas arrangements.
